TD Newcrest Upgrades Open Text (OTEX) to Buy; Recent Dip Creates Opportunity; Previews Q4
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Price: $70.44 +0.24%
Rating Summary:
7 Buy, 4 Hold, 2 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 13 | Down: 24 | New: 24
Rating Summary:
7 Buy, 4 Hold, 2 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 13 | Down: 24 | New: 24
Trade OTEX Now!
TD Newcrest upgraded Open Text (NASDAQ: OTEX) from Hold to Buy, price target increased from $73 to $80.
TD analyst says, "We are upgrading Open Text to BUY and moving our target price to $80. Why now? 1) The recent 12% decline has, in our minds, created a more compelling risk/return; 2) positive software spending data points are
surrounding us. Most notably for Open Text, SAP guided to the high-end for FY11 software/services growth – and SAP drives around 10% of Open Text license revenue; 3) with Q4 (June) being seasonally strong for Open Text and with a weak comparable upcoming in Q1, growth momentum should stand above other Cdn tech names; and 4) Open Text showed with the Global 360 deal that sizable, synergistic deals are around, and sentiment around Open Text acquisitions is far more positive now than in the past."
"We Model License Revenue of $88mm in a Typically Strong Q4 (Above
Our View of Consensus at $83-$84mm)...Considering these factors, we think the estimated consensus license revenue growth seems achievable at +23% q/q. Looking forward to Q1, Open Text will be lapping an easy license revenue comp - Q1/11 revenue was down 25% Q/Q and 6% Y/Y – paving the way for continued momentum in license growth."
For more ratings news on Open Text click here and for the rating history of Open Text click here.
Shares of Open Text closed at $59.69 yesterday, with a 52 week range of $36.11-$72.32.
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TD analyst says, "We are upgrading Open Text to BUY and moving our target price to $80. Why now? 1) The recent 12% decline has, in our minds, created a more compelling risk/return; 2) positive software spending data points are
surrounding us. Most notably for Open Text, SAP guided to the high-end for FY11 software/services growth – and SAP drives around 10% of Open Text license revenue; 3) with Q4 (June) being seasonally strong for Open Text and with a weak comparable upcoming in Q1, growth momentum should stand above other Cdn tech names; and 4) Open Text showed with the Global 360 deal that sizable, synergistic deals are around, and sentiment around Open Text acquisitions is far more positive now than in the past."
"We Model License Revenue of $88mm in a Typically Strong Q4 (Above
Our View of Consensus at $83-$84mm)...Considering these factors, we think the estimated consensus license revenue growth seems achievable at +23% q/q. Looking forward to Q1, Open Text will be lapping an easy license revenue comp - Q1/11 revenue was down 25% Q/Q and 6% Y/Y – paving the way for continued momentum in license growth."
For more ratings news on Open Text click here and for the rating history of Open Text click here.
Shares of Open Text closed at $59.69 yesterday, with a 52 week range of $36.11-$72.32.
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